Presentation of Half Year Results for period ended 31 December 2003 - PowerPoint PPT Presentation

Presentation of Half Year Results for period ended 31 December 2003 David Murray Chief Executive Officer Michael Cameron Chief Financial Officer 11 February 2004 1 www.commbank.com.au

Disclaimer The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation, 11 February 2004. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate. 2

Speaker’s Notes  Speaker’s notes for this presentation are attached below each slide.  To access them, you may need to save the slides in PowerPoint and view/print in “notes view.” 3

Agenda  Half Year Results - Michael Cameron (40 mins)  Overview  Segment Performance and key items  Financial Update on Which new Bank  Progress of Which new Bank - David Murray (20 mins)  Questions 4

Half Year Results: Overview 5

Highlights  Good result: underlying profit growth of 17%  Another record dividend  Productivity improvement in all businesses  Further improvement in credit quality  Continued strengthening of Tier 1 capital  Which new Bank meeting early expectations  Share Buy-Back announced 6

A good result: 17% growth in underlying cash profit 31/12/03 31/12/02 Change $m $m Statutory NPAT 1,243 622 100% Goodwill amortisation 162 160 Appraisal value movement (165) 426 Cash NPAT 1,240 1,208 3% Which new Bank 346 - Strategic initiatives - 2002 - 39 ESAP - 2002 - 19 Shareholder investment returns (99) 8 Underlying Cash NPAT 1,487 1,274 17% 7

Banking and Insurance strong, Funds Management rebound $m 1800 Underlying Growth of 17% Investment 1700 Returns 99 Insurance 1600 Banking 54 1,487 1500 158 1400 Funds 1,274 1300 1,240 Management 1 1200 1100 Incremental 1000 Which new Bank 900 (346) 800 Underlying Jun-02 Banking Insurance Funds Underlying Underlying Investment Which new Cash Profit Dec-03 Dec 02 Returns Bank Profit Dec -02 Profit Dec-03 Dec-03 8

Key shareholder ratios 31/12/02 Change 31/12/03 Shareholder Ratios*  Earnings Per Share 95 cents 1% 96 cents  Return on Equity 12.4% 0% 12.3%  Dividends Per Share 79 cents 69 cents 14%  Payout Ratio 72.7% 14% 82.9% * Based on Cash NPAT 9

Another Record Dividend 150 154 160 85 136 • Interim dividend of 82 140 130 79 cps, up 14% on 75 115 72 120 pcp 102 104 66 100 90 58 57 82 ents 52 80 46 C 79 • Payout ratio of 82.9% 60 69 68 60 reflecting Which new 61 36 58 42 Bank expenditure 49 40 46 45 22 impact in 2004 38 36 20 24 20 0 1993 1995 1997 1999 2001 2003 First H alf S econd H alf 10

Segment Results: Banking 11

Banking  Performance driven by growth in home lending and sound asset quality  In summary:  14% underlying profit growth  9% growth in banking income  4.6% annualised productivity improvement since June 2003  9% growth in lending assets since June 2003 12

14% underlying profit growth driven by strength in home lending $m 2,000 14% increase from underlying business 1,900 1,800 1,700 Other Bank Income Taxation 1,600 Interest 104 (58) Which new 1,500 Income Bank 217 1,400 1,294 (324) 1,300 1,136 BDD 1,200 1 1,100 970 Expenses 1,000 (106) 900 800 Underly ing Interes t Other Bank BDD Ex pens es Tax ation Underly ing Whic h new Cas h Prof it Underlying Underlying Cash Profit Cas h Prof it Inc ome Inc ome Dec 03 Bank Dec 03 Profit Dec-02 Profit Dec-03 Dec-03 Dec 2002 13

Underlying Banking Cost to Income ratio has improved by over 4% annualised % 60 58 56 4.6% annualised productivity 54 improvement 54.2 54.0 52 52.2 50 51.9 50.7 48 June 2006 Target:Under 46 48 44 Dec- Jun- Dec- Jun- Dec- 01 02 02 03 03 14

9% growth in lending assets* over the last six months 191,272 200000 175,074 169,084 13,734 13,197 12,831 52,694 150000 49,305 50,427 12,616 12,369 100000 12,281 112,228 100,203 50000 93,545 0 Dec 2002 Jun 2003 Dec 2003 Housing Personal Business & Corporate Bank Acceptances *Lending assets excludes securitised housing loan balances $5.3b (Dec 03), $6.5b (Jun 03) $5.9b (Dec 02) 15

Home lending growth profile* Product Balances Outstanding Source: 8% Loans Funded Owner occupied 1/07/03 - 31/12/03 Growth represented by: Investment Home 34% 58% Loan ($bn) 1H04 2H03 Viridian/ 24% Loans Access Advantage 76% Funded 23.1 18.4 Reductions 14.4 11.8 Balances by Loan Type Net Growth 8.7 6.6 Proprietary Standard Variable 21% Third Party Fixed Rate 48% 19% Honeymoon Discount Variable 12% * Data relates to the Bank’s Australian home lending business 16

Continued improvement in portfolio quality Top 20 Exposures to Corporates (Committed) Well Diversified Portfolio by Industry (Top 20 exposures are 3.5% of total committed Telcos Energy exposures of $245 billion) Leasing Technology Construction Aviation AAA A- A- A- Finance Other BBB S&P Rating or Equivalent Commercial AA+ A+ BBB Agriculture A- Government A+ A+ A High Quality Portfolio BBB 100% AA- BBB- 36 37 80% 39 40 A+ 60% A 16 17 15 14 64% BBB+ 40% 17 17 19 19 investment BBB grade 20% A+ 30 29 27 28 BBB 0% Jun 02 Dec 02 Jun 03 Dec 03 $M 300 400 500 600 700 AAA/AA* A BBB Other^ 17

The Bank’s asset quality remains sound 31/12/03 30/06/03 31/12/02 Charge for Bad & Doubtful Debts $150m $154m $151m (6 months) Charge for Bad & Doubtful Debts 0.19% 0.21% 0.21% to RWA* (annualised) Gross Impaired Assets $573m $639m $863m (net of interest reserved) Specific Provisions $198m $205m $264m General Provision $1,358m $1,325m $1,327m General Provision to RWA 0.86% 0.90% 0.92% *Risk Weighted Assets 18

Segment Results: Funds Management 19

Funds Management  Since June 2003, underlying profit rebound of 17% to December 2002 levels  Income to average FUM steady at 119 basis points  9.0% annualised productivity improvement since June 2003  FirstChoice continues to grow rapidly 20

Underlying profit rebounds to December 2002 levels $m $m After Tax Profit: 17% 200 200 Net Incremental 200 200 underlying growth Operating Which new in six months Income Bank 9 (19) 150 150 150 150 125 126 125 126 117 OEI 108 (1) 100 100 100 100 Operating S’holder Tax( Expense Invest 9) 2 Returns 10 50 50 50 50 0 0 Underlying Underlying Cash Profit Dec-02 Jun-03 Dec-03 Profit Dec-02 Profit Dec-03 Dec-03 21

Since June, FUM has grown by 7% and productivity has improved by 9% annualised $bn % 9.0% annualised productivity improvement 1 110 0.88 0.86 Underlying Expenses/Average FUM (%) 0.84 0.8 100 FY06 Average FUM ($bn) Target 0.6 90 Under 0.75 0.4 80 0.2 70 0 60 Dec-02 Jun-03 Dec-03 Average FUM Underlying Expenses/Average FUM 22

7% Growth in Funds under Management $m 7% underlying growth 105,000 6 (1) 100 100,000 1 94 95,000 90,000 85,000 Jun-03 Net Flows Investment Other Dec-03 FUM Returns FUM 23

FirstChoice continues to grow rapidly Funds under Administration of $5bn at 31 December 2003 Source Destination Half Year Growth represented by: Dec Jun ($bn) 2003 2003 39% 61% 50% 50% Inflows 2.2 1.6 Outflows 0.5 0.3 Net Growth 1.7 1.3 Proprietary CFS 3rd party External 24

Segment Results: Insurance 25

Insurance  Fourfold increase in underlying net profit after tax to $67m  Strong improvement in shareholder investment returns  9.2% annualised productivity improvement since June 2003  Continued growth in annual premiums  Positive experience profit for two consecutive halves 26

Insurance result reflects improved operating margins and strong investment returns $m 180 (3) 153 89 160 >400% increase from underlying business 140 120 100 67 8 80 35 60 40 11 13 20 0 U nderlying As ia Aus tralia N Z U nderlying S'holder Which new C as h Profit Profit D ec- Profit D ec- Inves t Bank D ec-03 02 03 R eturns 27

Since June, productivity has improved by 9.2% annualised $m % 9.2% annualised productivity improvement 60 1200 52.8 47.7 Average Inforce Premiums (%) 45.5 Average Inforce Premiums ($m) 50 1100 Operating Expenses/ 40 FY06 Target Under 30 1000 42 20 900 10 0 800 Dec-02 Jun-03 Dec-03 Average Inforce Premiums Operating Expense/Average Inforce Premiums 28

Australian Insurance business Distribution by Channel^ Product Sales 41% Growth represented by: 31% 32% 59% Dec Jun ($bn) 2003 2003 10% 27% Sales/New Business 91 83 Lapses 64 58 Lump Sum Third Party Net Network & Direct* General Growth 27 25 Disability Income * Network - Internal Bank Channels Group Risk and Direct - Telemarketing & Phone Masterfund ^ Excludes Group Risk and Masterfunds 29